What are differences between EBITA and operating income?

Banking & FinanceManagementCompanies/Organisations

The major differences between EBITA and operating income are as follows −

EBITA

  • EBITDA is defined as sum of EBIT, depreciation and amortisation (or) sum of net profit, taxes, interest, depreciation and amortisation.

  • It tells about company’s profit earning capacity.

  • The earning capacity of an organisation is calculated.

  • It is not recognised by GAAP.

  • The adjustments are made (depreciation/Amortisation).

  • It is calculated prior to operating income calculation.

Operating income

  • Operating income is defined as difference between net sales, cost of goods sold and operating expenses.

  • It tells about the profit earned due to operating activities.

  • It calculates how much revenue is converted into profit.

  • It is recognised by GAAP.

  • No adjustments (depreciation/amortisation) are required.

  • It is calculated after EBITA calculation.

raja
Published on 27-Jul-2020 11:32:16
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